Activities of Kuwaiti Companies and Their Impact on the the Use of Services of Foreign Auditors

Kuwaiti firms seek the services of foreign auditors since they need accurate financial reporting. A study involving 385 Kuwaiti businesses was performed. The methods utilized to recruit foreign auditors and the viewpoints of Kuwaiti businesses toward foreign auditors were assessed using factor approach and factor score. The outcome demonstrates that whether or not a corporation will recruit a foreign accountant depends on the reputation, performance, operational facilities, and growth of the accountant.

Introduction

For economic growth, Kuwaiti enterprises hire international accountants. The law permits them to do so. This essay examines Kuwaiti corporations' attitudes toward international auditors and their expectations of them. It uses discriminant analysis to separate companies that use foreign auditors and those that do not.

Literature Review

Ray and Pany state that the objective of an auditor is to provide valid assertions and analyzed accounts for a company. De Angelo argues that an auditor should be competent and independent in the provision of their services. Kunitake and Glezen say that auditors should be able to understand the companies’ operations. All this account to the fact that companies expect a professional, well trained and proficient auditor to offer accounting services, attributes attached to foreign auditors.

According to The Committee on Basic Auditing Concepts, auditing can be classified depending on the affiliation of individual or group that offers the service. They are; external – auditing by certified public accountants, internal – auditing by the company's qualified employees, and government auditors – auditing by qualified employees in the government.

Research Methodology

Out of the 385 companies surveyed, 125 use foreign auditors where the majority of them are shareholding and limited liability companies. The majority of them prefer foreign auditors due to low cost associated with hiring them, professional experience, academic qualifications, practical experience and good reputation. 78% of those companies use chartered accountants from the US, British, and Australia.

Past experience, personal care and the performance timing of the auditor received high ratings, while a moderate rating was given on recommendation from other firms and the importance of offering holistic services

Conclusions

The main factors that determine the attitude of Kuwaiti companies on foreign auditors are performance, reputation, operation facilities, and growth. The companies operating in the Agriculture, Mining and Quarrying sectors believe that foreign auditors assist in achieving high growth rate, while those in the industrial sector use them for the achievement of high reputation especially with the use of operation facilities. On the other hand, those in Banks, Finance, and Insurance use their services for gaining a good reputation.

The companies that use foreign auditors look for performance, reputation, and growth. Hence seek high performance ultimately.